The Mortgage Bankers Association's Market Composite Index, which measures mortgage application volume, rose 8.2% on a seasonally adjusted basis last week from a week earlier as mortgage rates fell.

The gain was propelled by increases in both the Refinance Index, which was up 9%, and the Purchase Index, which was up 6.7%, seasonally adjusted.However, the Purchase Index remaned 25.8% lower than it was in the comparable week last year.

"Rates dropped again last week as the Federal Reserve continued its QE2 asset purchase program," said Michael Fratantoni, MBA's vp/research. "The 30-year fixed mortgage rate is now 46 basis points below its 2011 peak, and has decreased for four straight weeks by a total of 31 basis points.

The four week moving average for the seasonally adjusted Market Index was up 2.9%, up 0.4% for the seasonally adjusted Purchase Index, and up 4.3% for the Refinance Index.

The refinance share of mortgage activity increased to 63.1% of total applications from 62.7% the previous week. The adjustable-rate mortgage(ARM) share of activity decreased to 6.5% from 6.7%.

The average rate for 30-year fixed-rate mortgages decreased to 4.67% from 4.76%, with points increasing to 1.10 from 0.75. The rate for 15-year fixed-rate mortgages decreased to 3.81% from 3.96%, with points increasing to 1.05 from 0.82.